New report on the enforcement of competition rules in the pharmaceutical sector

Newsletter Life Sciences and Healthcare 1/2019

The European Commission has published a report showing that active competition law enforcement, at EU and national level, in the pharmaceutical sector contributes to delivering more affordable medicines and more choice to patients and healthcare systems. Active enforcement was also found to promote further innovation on the area.

The report provides an overview of the enforcement of antitrust and merger rules in the pharmaceutical sector the last 10 years, and it describes market practises and findings that the authorities have found harmful to competition.

The Commission and national competition authorities in the EU have investigated over 100 cases and adopted 29 decisions against unlawful practices in the supply of medicines since 2009.

The competition authorities have sanctioned several anti-competitive practices leading to higher prices of medicines. These practices encompass actions such as:

exclusionary conduct to delay the entry of generic medicines into the market,

market sharing/price fixing practices,

pay-for-delay agreements, where originator and generic companies colluded to keep the generics off the market and shared the originator’s profits from doing so, and

excessive prices charged for off-patent medicines.

Several decisions imposed fines of more than 1 billion euros. Some decisions also impose remedies regarding the companies’ behaviour.

Competition enforcement also is found to contribute to maintaining a level of innovation in the sector by intervening against practices that could have distorted incentives to innovate, in particular to attempts to delay the entry of generic medicines into the market.

The merger control also contributed to innovation by preventing transactions that could have compromised research and development efforts to launch new medicines or to extend the therapeutic use of existing medicines.

The Commission concludes that investigations demonstrates that the pharmaceutical sector requires close scrutiny by competition authorities, and imply competition authorities need to continue scrutinising the sector.